Morganable Politics/PUBLiC Policy
The announcement marks a significant departure from previous financing frameworks that have been widely criticised for failing to deliver functional refineries despite billions of dollars in investments over the years
kaNo —
The Nigerian National Petroleum Company Limited has announced a major shift in its refinery financing strategy, ending the long-standing practice of funding rehabilitation and operations through crude oil-backed loans.
The new approach, unveiled by the Group Chief Executive Officer of NNPC Ltd, Bayo Ojulari, will require the Port Harcourt and Warri refineries to operate as commercially viable entities capable of raising their own financing based on performance and productivity.
Ojulari disclosed the development on Tuesday while speaking at the Nigeria Oil and Gas Conference in Abuja, stating that the national oil company was transitioning to a sustainability-driven model aimed at ensuring long-term profitability of the country’s refining assets.
According to him, the era of securing loans tied to crude oil production volumes rather than operational efficiency has ended, as the company seeks to instill financial discipline and accountability in refinery operations.
“You heard me talking about our refineries. We’re moving away from situations where the refineries are taking loans based on barrels and not linked to the productivity and performance of the refineries. We are changing that,” Ojulari said.
“Our solution has to be that those refineries are able to work, raise their own, and deliver, not more contractors coming to take value. That’s the strategy. That’s sustainability. And that’s what will live beyond us,” he added.
The announcement marks a significant departure from previous financing frameworks that have been widely criticised for failing to deliver functional refineries despite billions of dollars in investments over the years.
PH, Warri Refineries Suffer Neglect
Nigeria’s state-owned refineries located in Port Harcourt, Warri and Kaduna have struggled with operational inefficiencies, poor maintenance and repeated shutdowns, forcing the country to rely heavily on imported petroleum products despite being one of Africa’s largest crude oil producers.
“We recognise that our portfolio has put NNPC into a lot of problems in the past years, where a lot of infrastructure development projects do not have a clear line of sight to finance. They do not have a clear line of sight to profitability. We eliminated all of that from our portfolio last year,” he said.
He noted that the company has already begun implementing innovative financing structures for major infrastructure projects, citing the Ajaokuta-Kaduna-Kano gas pipeline as a model for the future.
“For the first time, we put in a new financing for infrastructure that has never been done in Nigeria, ‘Project Nexus’, where we are able to put financing against the AKK pipeline based on its own throughput, not from another barrel from anywhere. That is the way we are going,” Ojulari stated.
Industry analysts say the move could improve transparency and efficiency in the management of Nigeria’s oil assets if properly implemented, though concerns remain about the ability of the refineries to achieve the required performance benchmarks in the short term.
Ojulari stressed that the company’s refinery ambitions would depend heavily on strategic partnerships across multiple sectors, including engineering, logistics, technology and marketing.
“Our refinery ambition depends on integrated partnership. You can see that across engineering, logistics, technology, and marketing. Our energy transition journey requires collaboration with innovators and researchers, development institutions and new technology,” he said.
NNPCL Signs MoU With Chinese Firms
In line with this strategy, NNPC recently signed a Memorandum of Understanding with Chinese firms Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Company Ltd to explore a technical equity partnership for the Port Harcourt and Warri refineries.
The proposed arrangement could see the investors acquire a majority stake of about 51 per cent in the facilities, subject to due diligence, as part of efforts to rehabilitate, expand and reposition the refineries as profit-oriented ventures.
The partnership is expected to cover key areas such as completion of engineering works, operations and maintenance, capacity expansion, petrochemical integration and the development of gas-based industrial hubs around the refinery complexes.
If finalised, the deal would mark a shift away from the traditional contractor-driven model to one based on equity participation and joint governance, similar to the structure of the Nigeria Liquefied Natural Gas project.
Ojulari, during a recent visit to the Warri refinery, described the initiative as a strategic move to transform the facilities into sustainable businesses rather than merely completing rehabilitation works.
He maintained that the company was focused on securing the right mix of technical and financial partners to ensure efficient operations and long-term value creation.
Despite scepticism from some stakeholders who believe the refineries may never return to full functionality, the NNPC boss expressed confidence that the facilities would become commercially viable under the new framework.
However, the announcement comes amid growing scrutiny of the company’s past handling of refinery rehabilitation funds.
South South Group Urges EFCC To Investigate NNPCL
A South-South-based group, the South South Youths Initiative, has called on anti-corruption agencies, including the Economic and Financial Crimes Commission and the Department of State Services, to investigate the management of funds allocated to the Port Harcourt Refinery project.
In a statement signed by its National President, Comrade Imeabe Saviour Oscar, the group alleged that despite the reported expenditure of about $1.5bn on the Port Harcourt refinery rehabilitation, the facility remains non-functional.
“We note that the NNPCL historically committed a staggering $1.5 billion for the rehabilitation of the Port Harcourt Refinery. Years after this colossal sum was approved and injected into the project, the refinery remains dead, non-functional, and incapable of refining a single drop of crude oil,” the statement read.
The group urged the EFCC and other security agencies to launch a comprehensive investigation into former NNPC officials and contractors involved in the project, insisting that those found culpable should be held accountable.
As NNPC moves to implement its new financing model, analysts say the success of the strategy will depend on strong governance, transparency and the ability to attract credible investors willing to commit long-term capital.
For many Nigerians, the hope is that the reforms will finally lead to functional refineries, reduce dependence on fuel imports and stabilise domestic fuel supply.
